The Occupy Wall Street movement in the U.S. and the Yellow Vest protests in France capture a common feeling of discontent: The gap between the haves and the have-nots is growing.

Yet, over the last 25 years, total global inequality (inequality across all individuals in the world) declined for the first time since the Industrial Revolution (see Figure 1). This reduction was driven by falling between-country inequality, as poor countries became richer.

In contrast, progress on within-country inequality has been mixed (see Figure 2). While 50 countries saw within-country inequality decline between 2000 and 2015, 34 countries experienced an increase, notably some advanced economies where the poor and middle class have seen stagnant income growth.

The data have a few caveats. First, the data do not capture what has happened at the upper end of the distribution. When we include the incomes of the top 1 percent, the rise in within-country inequality becomes much starker. Second, the fact that global inequality is falling stands at odds with people’s perceptions. The average person in many countries, echoing the sentiments of the Occupy and Yellow Vest protestors, thinks that inequality is higher than it is; and that it has increased.

Increased inequality is one source of discontent with the neoliberal model. Also contributing to the discontent is a sense that the system is “unfair.” According to a recent survey in Europe and Central Asia, 20 percent of people believe that good connections are the primary driver of upward mobility. This contributes to the perception that wealth and opportunity are concentrated among a few who “luck out” based on circumstances of birth.

Drivers of inequality

How can we explain the sharp rise in within-country inequality where it has occurred? The current debate points toward a range of factors, including the persistence of deep inequalities of opportunity in the accumulation of human capital, the role of superstar firms with market power, and the impact of technological change. Another set of drivers are institutional, notably the decline of unions that gave workers a voice, and the negative impact of globalization on the ability (or willingness) of governments to tax corporate profits to support social safety nets.

Policies to help reduce inequality

In order to tackle rising inequality, we need to invest in policies to make market-driven growth more pro-poor and inclusive. First, we must reduce inequality of opportunity and its intergenerational transmission. Second, we need new policies to correct the failure of the labor market to provide decent employment and earning opportunities to a growing swath of the workforce in many countries. Third, we need progressive taxation and spending, but as a complement to—not a substitute for—policies that address the two core drivers of inequality.

In practice, this means:

Policies to develop the human and physical assets of the bottom 40 percent. One example: Early Childhood Development policies to promote physical, socio-emotional, and cognitive development in the early years. Children in poor households need this the most but get it the least.

Policies to ensure that markets work fairly for everyone. This means reducing market power concentration and rent-seeking behavior among firms. In some countries, this may mean less business regulation in order to foster a more business-friendly environment. In others, it may mean the opposite.

Policies to “build a strong and resilient middle class.” In order to protect workers and the existing or emerging middle class from shocks, social protection programs must adapt to the changing nature of employment relationships—in effect, de-linking social benefits from employment contracts. This is especially important in countries with large informal sectors.

Development of effective training programs. The demand for skills is changing, yet existing training programs are ill-equipped to reskill older workers. Emerging evidence suggests that experiential, on-the-job training is more effective than classroom instruction. More flexible options for post-secondary schooling are also needed, allowing for greater movement between the labor market and school.

Mobility policies and support for lagging regions. Large spatial disparities in labor market opportunities exist in many countries. Policies such as targeted college scholarships, housing credits, and portable social benefits can help facilitate movement to more productive areas. Some economists have also argued for renewed place-based policies to support opportunities in lagging regions.

Expansion of progressive transfers. In more formalized settings, in-work, earned-income tax credits or graduated social assistance can be combined with activation measures to support re-employment. In developing countries, transfers need to fit the local context: Worker tax credits are feasible in some settings, while unconditional or conditional cash transfers may be better in others.

More effective use of tax policy. Governments will need to raise additional revenue in order to finance a more progressive social safety net. There is room to both broaden the tax base while reducing exemptions that favor top earners. Corporate income taxes represent a potentially large source of revenue, but international cooperation is required to combat tax evasion and capital flight. Taxes on environmental externalities could also help fund social safety nets.

It’s time to reframe the narrative on inequality. Overall, trends are not as dire as the global rhetoric contends; total global inequality has declined and within-country inequality has fallen more often than it has risen. The countries that experienced a decline did so largely by adopting some combination of the above policies; Latin America, for instance, heavily invested in education to reduce inequality of opportunity.

However, progress is not inevitable. Promoting inclusive, pro-poor growth requires concerted policy efforts. Real structural inequalities in the economy prevent the poor from rising to the middle class and leave the middle class vulnerable to shocks. The growing populist movement in advanced economies is a predictable response to stagnating wages, middle class contraction, and worker displacement. Yet populist policies are likely to make the problem worse in the long run. In order to combat this growing discontent, governments need to play an active role, tackling pre-distribution, in-distribution, and post-distribution inequality.

Following last month’s World Bank and International Monetary Fund (IMF) Spring Meetings, the World Poverty Clock has been updated to reflect newly available and revised data related to income distribution, national accounts, and GDP forecasts for nearly every country in the world. The resulting new estimates and forecasts on the state of global poverty, released today, point to a depressing new dynamic.

The pace of poverty reduction is down by two-fifths since 2017

When the World Poverty Clock was launched exactly two years ago, on average, one person escaped poverty every second. Last year, the pace of poverty reduction slowed down to 0.8 people per second. Our latest projections show that the pace of poverty reduction has further slowed down to 0.6 people per second. This is a result of the slowdown in the global economy that is affecting several African countries negatively as well as the negative trends in important crisis countries such as Venezuela and Yemen.

At the same time, there are several strongly performing Asian economies, especially India, where lower than previously projected poverty estimates result in a base effect of lower absolute poverty levels. As these countries have fewer people in extreme poverty, the poverty escape rate also slows down. This means that—under a base case projection—in 2030, around 480 million people will still be living in extreme poverty, up 44 million from the previous estimate.

Figure 1: By 2030, Asia will end extreme poverty; Africa will progress slowly

Source: World Data Lab, latest projections.

With this update, World Data Lab projects that Africa has 427 million people living in extreme poverty. This means that the continent is expected to be home to almost three-quarters of global poverty by the end of 2019. Still, many parts of Africa, such as Ethiopia and Kenya, are making significant progress towards achieving Sustainable Development Goal 1—ending extreme poverty—by 2030 and this is the reason why Africa has now started to reduce poverty numbers overall. However, even with this progress, these countries are not expected to achieve SDG 1 by 2030.

In fact, almost all sub-Saharan countries are not on track to achieve SDG 1. Under current projections, almost 395 million Africans will still be living in extreme poverty by 2030. They would represent 82 percent of the global total. Conversely, the rest of the world is on track to end extreme poverty by 2030 with just a few exceptions, most notably Afghanistan, Venezuela, Haiti, North Korea, Papua New Guinea, and Yemen.

Extreme poverty in Yemen, Venezuela, and Tanzania has increased

Due to conflicts in Yemen and Venezuela and an economic slowdown in Tanzania, some of the biggest increases in poverty projections are in these three countries.

Following the release of new data, the number of Yemenis living in extreme poverty has been revised, with an increase of 8.4 million more people than previously estimated. Poor Yemenis now number 17.7 million, representing 57 percent of the country. For Venezuela, we forecast an increase of 2.4 million more people living in extreme poverty than previously estimated. We estimate 8.6 million Venezuelans, representing 26.5 percent of this upper middle-income country, are now indigent. In Tanzania, 6.1 million more people (23.5 million total) are estimated to be living in extreme poverty than previously forecasted, representing 41.5 percent of the country. There will be serious challenges ahead for East Africa’s third-largest economy. While the country is still expected to significantly reduce poverty over the next decade, it is not expected to achieve SDG 1 by 2030 and is now even more off-track than previously estimated.

Time’s almost up

Ten years remain for the global community to mobilize the support needed to achieve the Sustainable Development Goals. This task is going to be difficult, as it is now evident that the rate of global poverty reduction has slowed down to almost half its pace just a few years ago.

While achieving SDG 1 in every country of the world by 2030 seems increasingly unlikely, countries, policymakers, and development practitioners can and must focus on increasing the rate of poverty reduction. As the refreshed global poverty numbers indicate, even small changes in the pace of poverty alleviation result in sizeable changes in magnitudes at the national and international levels.

With the fate of so many hanging in the balance, the stakes could not be higher.

Across Western economies, the future of capitalism is suddenly up for debate. Driven in part by the twin shocks of Brexit and the election of Donald Trump, the prevailing neoliberal economic model—which prioritized a light touch regulatory regime, minimal barriers to trade and foreign investment, and overall a small role for the state in managing the economy—is under attack from both the left and the right. Will neoliberalism be displaced? And what will come next?

Around the world, meanwhile, emerging markets have been grappling with similar questions for decades. Neoliberalism spread unevenly across emerging markets, and likewise many of them have been moving beyond neoliberalism for decades. These varied experiences provide valuable insights into the strengths and weaknesses of neoliberalism and the future of economic and political policymaking in a post-neoliberal world. If the Washington Consensus mantra of “stabilize, privatize, and liberalize” has lost relevance today, what—if anything—has taken its place? How are different countries reevaluating the relative roles of states and markets in delivering economic development? Are there new “models” that are generalizable and applicable across countries and contexts?

This report, which is the output of an academic workshop hosted in January 2019, seeks to provide some initial answers to these questions. It is organized around five big issue areas where neoliberalism provides incomplete or unsatisfactory policy guidance: growth strategies and industrial policy, inequality, finance and monetary policy, the environment, and power and politics.

The last 25 years saw large increases in living standards and declines in extreme poverty globally. As of 2015, 736 million people, or 10 percent of the global population, lived on less than $1.90 per day.1 In 1990, the corresponding figure was 36 percent.2 Progress was slower at the higher poverty lines of $3.20 per day (relevant for lower middle-income countries) and $5.50 per day (relevant for upper middle-income). About one quarter of the world is poor under the former, and almost one-half under the latter.

This reduction in global poverty resulted from strong inclusive growth in developing countries as they integrated into the global economy. Incomes of the poorest 40 percent grew in 60 out of 83 countries measured.3 In 49 out of 83 countries, the poorest 40 percent grew faster than the top 60 percent. Open trade and globalization were fundamental enablers of this strong growth, especially for East Asia and India.4

The last 25 years also saw a decline in total global inequality (that is inequality across all individuals in the world). While global inequality remains high, this period witnessed the first ever decline in total inequality since the industrial revolution.5

The reduction in total global inequality was driven by the reduction of between-country inequality. In contrast, progress on within-country inequality has been mixed. Encouragingly, in 45 out of 78 countries with data, within-country inequality declined between 2000 and 2010, with notable achievements across Latin America.6 However, 30 countries experienced an increase in within-country inequality, importantly some advanced economies, where the poor and middle class have seen stagnant income growth for the past two decades.7 Despite the overall positive global trend, the increase in within-country inequality in advanced economies has dominated the global discourse over the last few years.

It is now clear that the world is not on track to achieve the Sustainable Development Goals (SDGs) by 2030. While there is progress on some fronts, such as poverty, it is nowhere near fast enough to accomplish the vision of sustainable development. On several indicators, including stunting in young children, there is little discernible progress over time. Millions are being left behind. This is particularly true in rural areas that are at risk of being forgotten because the focus of policymakers is shifting towards urban areas, where slums, unemployment, and congestion threaten national progress.

It is still the case that most of the world’s poor and malnourished people live in rural areas and depend on the agricultural sector for food and livelihoods. Rural areas are hard to develop. They are not the place of choice for industrialization, still seen by many policymakers as the best pathway to development. They can be distant from major markets, have limited density, and suffer from the divisions that affect where value chains emerge. Rural areas are also often the locus of conflict and ethnic strife, with limited justice and security, and are among the least resilient places to climate change and natural hazards.

In our chapter in the 2019 Global Food Policy Report from the International Food Policy Research Institute (IFPRI), we delve into the issues of how to end hunger and deliver the following recommendations:

Improve data to provide evidence for sound policymaking.

Take a systems approach to integrate the crosscutting issues that rural areas face.

Provide long-term, stable financial and technical support for reducing rural poverty and malnutrition, while strengthening national and international accountability mechanisms for the results on rural revitalization.

Improve the rural investment climate to attract increased business.

In this blog, we focus on the first recommendation, to improve data. It is disappointing that four years into the SDG era, we cannot answer even simple questions like “what is happening to world hunger?” The most commonly used indicators tell conflicting stories. Figure 1 highlights this confusion. Rural poverty, as measured by income/consumption below $1.90 per person per day (PPP) has fallen steadily for decades, in one of the great success stories of global development. By contrast, the number of undernourished people has been flat and may even have risen slightly in recent years. Meanwhile, people’s feelings of food insecurity, as indicated by responses to a survey question as to whether they have enough money to buy food, seem to have heightened across the world in the last 10 years. And one of the most important indicators of malnutrition, stunting in children ages 5 and below (measured as the proportion of children with below normal height-for-age), has held steady at stubbornly high levels: 151 million children remain stunted today.

These four indicators paint a confusing picture of progress and indeed the current situation of hunger across the world that makes policymaking hard. Without clarity on results and outcomes it becomes impossible to address whether focus should be on mobilizing more resources, on improving the effectiveness of spending, or on resilience and prevention. Inadequate outcome data means we cannot quickly and reliably learn what works and scale up or replicate those efforts.

Unfortunately, each of the data series in Figure 1 comes from a different organization. The Gallup World Poll gives self-perception figures; the World Bank provides data on rural poverty; the Food and Agriculture Organization (FAO) measures undernutrition; and the World Health Organization (WHO) is the source for stunting. No entity is responsible for reconciling the data or understanding the sources of divergence.

It could be the case that different trends for different indicators are measurement errors. Or it could also be the case that the data are accurate, but are measuring different things. For example, India has reduced rural poverty and increased the daily supply of calories in rural households, but continues to be plagued by high rates of stunting, probably because of the absence of sanitation. It is not surprising, then, to see different trends in India. Confidence in the data has encouraged the government to address stunting in a complementary way by launching a $14 billion plan to build over 100 million toilets, mostly in rural India. So it is possible to have diverging trends across indicators of hunger.

Yet this is the exception rather than the rule. Ever since Amartya Sen famously showed that famines were not caused by the lack of food, but by access and affordability of food, poverty and undernourishment have been generally expected to move in the same direction. This is one reason why food price increases can worsen hunger in some places. They can reduce real rural incomes, especially for families that do not grow enough food to feed themselves. When the experiences across countries are compared, this relationship between rural poverty and undernourishment is found to be strong. But in individual countries, over time, especially in recent years, the relationship seems to be far weaker. It is difficult to tell whether this is because of mismeasurement in the data, or because indeed the relationship is changing in significant ways. Yet without such an understanding, policymaking cannot be evidence-based.

There are many other examples of where we lack data needed for policymaking to end hunger: smallholder yields and amounts of food loss and waste come to mind. These are not available for many developing countries. They should be.

The international community has already put forward some data initiatives to fill the gaps in knowledge. The recently agreed-to 50 x 2030 initiative from FAO, the International Fund for Agricultural Development, the Global Partnership for Sustainable Development Data, and the Bill & Melinda Gates Foundation aims “to make improved agricultural data available in 35 countries by 2025 and in 50 countries by 2030,” and will work to harmonize FAO and World Bank survey approaches to fill the information gap about developing-country smallholder farms. At a broader level, participants at the U.N. Data Forum in October 2018 passed the Dubai Declaration in support of the Cape Town Global Action Plan for Sustainable Development Data, resolving to “ensure that quality, relevant, timely, open and disaggregated data at all levels of geography […] are made available and accessible to all users” and strengthen the internationally agreed-upon framework for modernizing statistical systems.

It is heartening to see a recognition of the data quality problem, but no entity has the authorization to ensure that matters improve. As the SDGs turn 5 next year, it is imperative that quality data is available to help the international community monitor all affected populations. Our proposal is simple. There should be a technical working group to propose ways of improving the coverage, quality, and timeliness of outcome data on hunger. Empower the working group to sort out why there appear to be inconsistencies in the indicators provided by different agencies. Use this analysis to suggest ways of systematically improving data collection. When world leaders come together to review the SDGs in September, we should be able to convincingly answer the simple question: Are we reducing hunger in the world?

However, there is light at the end of the tunnel. According to projections from the World Data Lab, Africa has now reached a milestone in the fight against poverty. As of March 2019—and for the first time since the start of the SDGs—more Africans are now escaping extreme poverty than are falling (or being born) below the poverty line (Figure 1). The pace of this net poverty reduction is currently very small: only 367 people per day. Nevertheless, by the end of this year, this rate will increase to over 3,000 people per day, resulting in a 1 million-person reduction in total African poverty in 2020.

If these broad trends continue, by 2030, Africa will reduce the ranks of its extremely poor by 45 million and relative poverty will decline from 33.5 percent today to 24 percent. However, this still means that the continent will fall short of achieving Sustainable Development Goal (SDG) 1, eradicating extreme poverty by 2030. Approximately 377 million Africans will still be living on less than $1.90 a day and very few African countries will have ended poverty.

The most significant challenges for reducing poverty in Africa are found in just two countries: Nigeria and the Democratic Republic of the Congo (DRC). Taken together, the 150 million citizens of these two countries represent more than one-quarter of total poverty in Africa today—and are expected to represent almost half of Africa’s poor by 2030. Even though Nigeria is expected to lift nearly 10 million of its citizens up to the middle class (or beyond) over the next decade—relative poverty shares will decrease by almost 3 percent—the absolute number of poor people in Nigeria will still increase by some 20 million due to rapid population growth. In the DRC, relative poverty is projected to drop by as much as 15 percent but the absolute number will increase by almost 2 million, meaning over half the population will still be living in extreme poverty by 2030.

By 2030, Africa will represent approximately 87 percent of the global poor—the main hotspots outside Africa will be Haiti, Papua New Guinea, Venezuela, Afghanistan, and North Korea.

However, many countries are making progress towards ending poverty, including in sub-Saharan Africa. Today, four countries already have poverty rates of below 3 percent: Equatorial Guinea, Gabon, Mauritius, and Seychelles. Currently, Mauritania and Gambia are projected to join this group by 2030. There are six additional countries whose poverty rates are expected to reach below 5 percent. With a slight acceleration of growth, these economies could also make extreme poverty history by 2030:

Ethiopia, Africa’s second largest economy, is projected to lift 22 million people out of extreme poverty by 2030, reducing the percentage of Ethiopians living in extreme poverty from 25.6 percent today to 3.9 percent. If the poverty escape rate can be accelerated, the country will fulfill SDG 1 by 2030.

Ghana is projected to lift approximately 2 million people out of poverty by 2030 while its population grows around 24 percent to 36.1 million. Even with this demographic challenge, the country will reduce the percentage of its total population living in extreme poverty to 4.5 percent from 12.5 percent today.

Kenya will make a leap forward and is projected to lift 3.5 million of its citizens out of poverty. By 2030, Kenya will reduce the percentage of Kenyans living in extreme poverty from 20.9 percent today to 4.3 percent. The country will be achieving this milestone even though its population is projected to add around 23 million people.

Angola is currently experiencing a short-lived period where poverty is rising. This began in September 2017. However, World Data Lab forecasts indicate that by 2021, extreme poverty will fall again and by 2030 it will be an estimated 3.5 percent. If this trend can be reversed sooner, then the country also stands a great chance of fulfilling SDG 1.

Côte d’Ivoire will also make substantial progress in poverty reduction. By 2030, 5.3 million of its citizens are projected to be lifted out of poverty, bringing down the percentage of citizens living in extreme poverty from 17.2 percent today to 4.9 percent.

Djibouti, the smallest country in this set of poverty-reducing economies, is projected to reduce relative poverty from 14.2 percent to 4.6 percent—lifting over 80,000 of its citizens out of poverty by 2030.

If current trends stay as they are, Ethiopia and Kenya are projected to achieve SDG 1 by 2032; Ghana, Angola, and Côte d’Ivoire in 2033; while Djibouti will follow a year later in 2034.

As the global poverty narrative shifts towards Africa, including at this year’s U.N. General Assembly, it seems clear that ending extreme poverty by 2030 seems almost impossible at this point. However, it is important to note that the continent has turned the corner and poverty levels could come down substantially over the next decade.

When wealthy people espouse left-wing causes, such as redistribution of wealth, those on the right often label them hypocrites. “If you are so concerned about equality, why don’t you give up some of your own income first?” is the usual retort.

This response can have a powerful dampening effect. Most people do not like to think of themselves as hypocrites. So the wealthy are faced with a choice: either give away some of their assets and then campaign against inequality, or just keep quiet. Most prefer the second option.

This is unfortunate, because global inequality is reaching intolerable levels. What’s more, wealth tends to remain in families over time. Inequality is becoming dynastic, with some people born rich and vast numbers who are poor from the moment they appear on Earth.

The injustice of this is so grotesque that just thinking and talking about it should prompt us to demand corrective action. But by stopping the most influential segment of society from expressing dissent, the right has stymied the first step in this process.

We now have plenty of statistical evidence of inequality, thanks to research by Thomas Piketty, François Bourguignon, Branko Milanović, Tony Atkinson, and others. For example, Oxfam’s latest annual report estimates that the 26 richest people on earth own the same wealth, or have the same net worth, as the 3.8 billion people who comprise the bottom half of the world’s wealth distribution. Moreover, according to Oxfam, the combined wealth of the world’s billionaires grew by $900 billion last year, or nearly $2.5 billion per day.

Inequality within countries is also spiking. The World Inequality Report 2018 estimates that the sharpest increases in wealth concentration at the top are occurring in the United States, China, Russia, and India.

True, a certain amount of inequality is both inevitable and essential to drive the economy. But inequality today far exceeds this “Goldilocks” level. Regardless of the continuing debate about how exactly to measure wealth and income inequality, there can be little doubt that both are unconscionably high. Walking through big-city slums in developing countries, witnessing the squalor and misery of the poor and homeless in rich countries, and looking at the homes and lifestyles of the rich anywhere, the need to address the current situation becomes clear.

Moreover, the right to call attention to that need must not be restricted to the poor. The right-wing response that silences rich people with left-leaning views may look reasonable at first, but it is a non-sequitur. You can be well-off, rich, or super-rich, and unwilling to give up your wealth unilaterally, yet still think the system that has allowed you to earn and accumulate so much is unfair. There is no contradiction or hypocrisy in such a stance.

Some of the world’s finest thinkers concur. The British philosopher Bertrand Russell famously argued (clearly with himself in mind) that smoking good cigars should not debar one from being a socialist. And American economist Paul Samuelson made a similar point in “My Life Philosophy,” an essay he published in 1983. Samuelson became quite wealthy thanks to the phenomenal success of his textbook “Economics,” which was required reading for undergraduate students all over the world for decades. But he was clear about where he stood politically. “Mine is a simple ideology that favors the underdog and (other things equal) abhors inequality,” he wrote.

At the same time, Samuelson admitted that when his “income came to rise above the median, no guilt attached to that.” And he wrote with striking frankness that, although he rejected giving up his wealth unilaterally, “I have generally voted against my own economic interests when questions of redistributive taxation have come up.”

Arguably the most famous historical example of a rich person striving for greater equality was Friedrich Engels, whose father owned large textile factories in the greater Manchester area of England and elsewhere. Young Friedrich became radicalized seeing child labor and the suffering of the working classes.

Later in life, Engels returned to work for his inherited business so that he could support the efforts of his friend, Karl Marx, to put an end to that kind of profit. No matter what one thinks of the desirability or viability of Marx’s precise proposal, the yearning to rectify gross social inequalities is surely admirable.

There is hope today, too. Several of the super-rich, in the US and elsewhere, openly support the broad left and its objective of curbing extreme inequalities. They are willing to endure allegations of hypocrisy for this larger goal, which makes their cause morally powerful.

Progressive individuals who willingly give up their own income advantage are admirable. But, whether or not they take that step, they cannot be silent on the need for collective action to tackle extreme inequality, one of the most pressing global issues of our time.

This February, President Trump announced his new Women’s Global Development and Prosperity Initiative (W-GDP), a “whole-of-government” approach that aims to promote women’s economic empowerment (WEE) across the globe. Framed as a component of his National Security Strategy, W-GDP builds around three core pillars of intervention. The first pillar, “women prospering in the workforce,” advocates for workforce development, vocational and skills training to increase women’s labor force participation. The second, “women succeeding as entrepreneurs,” supports expanding access to capital, markets, and networks to help women grow their small businesses. The third pillar, “women enabled in the economy,” seeks to remove legal, regulatory and cultural barriers that inhibit women’s equal participation in the economy. The President also proposed the establishment of a $50 million fund within the U.S. Agency for International Development (USAID) to support new projects in line with the W-GDP agenda. The initiative aims to reach 500 million women by 2025.

The President’s new initiative is a positive step by the administration to promote WEE and gender equality, and largely aligns with what leading research suggests—that women’s economic participation and empowerment matter greatly for economic growth and poverty reduction.

Though the lives of women and girls in developing countries have improved dramatically in the last 50 years, women’s access to economic opportunities remains constrained. While women participate in the labor market more than ever before, gender gaps in earnings, productivity, and economic activity persist across all countries and levels of income (see Figure 1). As wageworkers, women concentrate in lower-paying sectors and occupations. As entrepreneurs, they lead smaller firms in less profitable sectors. As farmers, they work smaller plots and have lower yields. These gaps matter for economic growth; the McKinsey Global Institute estimates that full female participation and integration into the labor force could boost global GDP by as much as 26 percent.

Drivers of the gender gap

The existence and persistence of these gender gaps stems from three key factors: different use of time, different human capital, and discrimination. First, women devote more time to care and related household work than men, which limits the time they have available for paid work. This division of labor stems from deep-rooted social norms about the roles of women and men, which have proven remarkably resistant to change. Second, though gender disparities in school attainment have shrunk or even reverted in some countries, important differences remain in educational trajectories and the types of skills men and women acquire in school. These skills gaps are often the result of self-segregation into traditionally male and female fields of study, which, in the long run, makes it difficult for women to compete on a level playing field for higher paying jobs in high growth sectors. Third, markets and institutions often work in ways that treat women and men differently. In sectors with low female employment, employers may be reluctant to hire women based on biased beliefs about their qualifications, or fear of the additional “costs” that may come along with a female employee—such as maternity leave or absences due to child care. Discrimination in labor and credit markets and differential access to productive inputs also contribute to an unequal playing field.

While the W-GDP initiative announcement acknowledged most of these factors, it largely skirts around some of the more sticky elements that impede women’s labor force participation. The three pillars focus on human and physical capital needs, as well as hard skills training—inputs that are relatively easy to provide and core components of many development programs. On the other hand, the initiative fails to tackle some of the less visible barriers to WEE, such as soft skills gaps, social norms, informal institutions, and household dynamics. While it mentions the role that unpaid care work plays in limiting women’s economic participation, none of the pillars include a clear call for policies or programs to reduce this constraint—arguably the largest obstacle for most women in the developing world (see Figure 2).

Pillar Two highlights how women’s lack of access to markets, information, and networks inhibits the success of their businesses. Yet it largely treats these access issues as individual constraints, downplaying the way institutional structures and social norms systematically restrict women’s active participation in the labor force. Studies find that while finance and business training increase the profitability of male entrepreneurs, these inputs alone do not create similar gains for females. Women face different market barriers due to sociocultural factors—female entrepreneurs, for instance, are often more risk averse than their male counterparts, and may lack soft skills more often cultivated in boys, such as leadership. These more nebulous attitudinal and cultural barriers to WEE are harder to tackle, as there are less clear policy prescriptions. Yet failing to address them means that W-GDP’s impact on WEE will be limited at best.

Figure 2. Barriers to women’s labor force participation

Source: Gallup Inc. and ILO (2017)

Building an evidence base

While the W-GDP approach does not address the full range of policy and programming responses necessary to support WEE, it does address a core need: building up an evidence base about what works. In the announcement, President Trump called for the establishment of clear metrics to define what successful WEE looks like, and the evaluation of current U.S. government programming. This will be challenging, as there has been relatively little progress on WEE, and the evidence on many types of interventions is mixed. A recent review of women’s entrepreneurship interventions finds that while loan and business training programs did not increase the profitability of female-owned businesses in Uganda and Tanzania, a similar training initiative in Nicaragua led to large increases in women’s income. The evidence around microfinance, once believed to be the panacea to global poverty and a core tool to promote female small and medium enterprise growth, is also largely mixed; some studies find no differential effects between male and female borrowers, while others find men reap larger gains. Another report found that strengthening land rights, providing extension services, and facilitating access to markets all have clear positive impacts on female farmer productivity. Yet the evidence is mixed on other common interventions, such as improving the use of new seed varieties, providing community-based childcare, and promoting high-value crop cultivation. Researchers find that economic empowerment interventions need to do more than provide access to skills and inputs—they need to shift women’s consciousness and mindset, and challenge sociocultural norms. Building up an evidence base around what works may arguably be W-GDP’s largest contribution to the WEE agenda.

Promoting greater gender equality matters intrinsically, but it is also sound economic policy. Reallocating female labor to more productive uses will enhance overall economic output, GDP growth, and household-level well-being. A forthcoming paper finds that in more gender equal countries, industries with high female employment grow faster than industries with low female employment, suggesting that gender equality provides an enabling environment for economic growth. Women’s labor force participation matters for countries at all levels of development, but the impact in developing countries, where the productivity and opportunity gaps between men and women are particularly large, is substantial. The W-GDP initiative is a welcome reprioritization of the importance of WEE in the U.S. development agenda, creating shared direction and allocating additional (albeit small) resources towards the issue. However, supporting WEE is not just about increasing access to finance and providing hard skills training; progress also depends on addressing the larger informal, institutional, and social norms that inhibit women’s full participation in the economy.

In the United States and Western Europe, a vibrantdebate has erupted on the future of capitalism and how to revamp prevailing economic models to address grievances and meet new demands for redistribution and social and environmental protection. Following the twin shocks of 2016—the U.K. Brexit vote and the election of Donald Trump in the U.S.—right-leaning nationalism and populism appear to be gaining steam, buoyed by the public’s dissatisfaction with globalization. At the same time, the political left is also growing more ambitious and confident; for instance, according to one recent poll, Americans aged 18-29 have a more positive view of socialism than of capitalism. Overall, the elite consensus surrounding the neoliberal economic model—which advocated a relatively small role for government, deregulating markets to encourage competition, and liberalized international trade and financial policies—is teetering.

In emerging markets, meanwhile, a related series of debates are unwinding, and have been for many years. Among these countries, the neoliberal economic model peaked in popularity sometime in the 1990s, in the aftermath of the collapse of the Soviet Union and amidst optimism in an accelerating globalization, epitomized in the creation of the World Trade Organization (WTO). Even at its peak, however, the neoliberal reform program was always implemented unevenly across countries and adapted to local contexts. Since then, a number of alternative models have been proposed in response to a series of economic and political shocks, from the Asian financial crisis to the “Pink Tide” in Latin America to the Arab Spring. These experiences provide a fertile ground for assessing the possible futures of capitalism, across both emerging and developed markets.

To debate these related issues, Brookings recently hosted a group of 45 leading economists and political scientists for a day and a half workshop on the state of neoliberalism and its alternatives across emerging markets. The meeting produced a rich, nuanced, and contested discussion on evolving economic and political priorities. Overall, while participants broadly agreed that the neoliberal moment had passed, there was significant variation in what could—and should—come next.

One cross-cutting theme was whether the existing neoclassical economics paradigm should maintain its pre-eminent place in economic policymaking, or if more eclectic, heterodox approaches were needed.

A number of participants argued that, though some policymakers inspired by neoliberalism may have dismissed concerns such as inequality and environmental degradation in the past, such policy recommendations don’t necessarily follow from the principles of neoclassical economics. Indeed, neoclassical economics allows for the possibility of both government and market failures, and has much to say on topics such as how to provide public goods. For instance, taxing environmental externalities is a textbook neoclassical economics policy recommendation; the fact that some policymakers have neglected it does not mean we need a search for new economic models. Critics that conflate crude neoliberal policies with the neoclassical economic paradigm risk throwing out the baby with the bathwater.

Conversely, other workshop participants advocated that changes to economic thinking were needed to deliver more radical policy reforms. Neoclassical economics’ focus on individual incentives and utility maximization misses much bigger questions about structural power relations, which play a central role in determining economic outcomes. Similarly, individuals’ desires for status, happiness, and identity are first order concerns, and cannot be easily incorporated into neoclassical models based on assumptions of rationality. Alternative, heterodox approaches to economics—which had flourished in earlier eras but lost ground to neoclassical approaches in recent decades—are due for a revival. Such approaches could, for example, pay more attention to crises, tipping points, and transitions rather than equilibria outcomes; provide a richer treatment of power and politics; and study how governments create and shape markets, rather than simply respond to market failures.

Ultimately, whether participants favored working within or beyond the neoclassical framework, there was general agreement that the current policy toolkit was insufficient for addressing contemporary demands for change. To date, the ambition of specific policy proposals appears to have lagged behind the diagnoses of shortcomings in existing systems.

This suggests the need for a broad research agenda on how economic and political models are evolving across emerging markets, and what lessons may be translatable across country contexts. The workshop was one piece of a broader Brookings project seeking to advance this conversation. In the weeks and months ahead, we’ll be writing more on this wide-ranging topic—stay tuned.